Monday, November 16, 2009

It's too risky to skip health insurance

On Mondays, we answer a question from a reader. If you have a question, please leave it in the comments section.

Q: If I lose my job, should I keep the health insurance through COBRA? It seems expensive.

Answer from Dan Danford: COBRA is a continuation of the employer's health plan after termination. The reason it's so high is because the terminated employee is now paying the entire premium cost whereas before that the employer paid some portion. Under the Stimulus Plan, for a limited period of time, the government will pay 65 percent of COBRA premium costs for most terminated employees. Actually, as I understand it, the employer pays the 65 percent and then gets reimbursed by our government. Of course, health plans differ from employer to employer, so exact cost, terms, and benefits for one person are often different than another.

Whether to use the COBRA provisions from your former employer should be decided based on your circumstances. People who are young and in good health may be able to find an individual of family health policy cheaper than the COBRA costs. Older workers may not be able to find better or cheaper coverage, especially with the 65 percent reimbursement. Whatever your circumstance, it's probably wise to check into buying another policy, just for comparison's sake.

In all circumstances, it's very hazardous to run without health coverage. The cost of even minor accidents or illnesses is enough to sink most family boats. At the very least, find a high deductible policy that protects against catastrophic events. Without one, a lifetime of savings could disappear in a moment. The risk is too high to go without.

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Dan Danford is founder and CEO of Family Investment Center in St. Joseph, Missouri. The firm is a commission-free investment advisor registered with the SEC. Danford and other advisors at the firm specialize in managing large portfolios of traditional investments. They do, however, advise investors on a broad range of wealth management services. More about Danford and this unique firm can be found at www.familyinvestmentcenter.com or call (816) 233-4100.